View this article online: https://www.insurancejournal.com/news/west/2012/06/08/250763.htm
A current and a former insurance agent from Southern California have been arrested for allegedly running a million-dollar Ponzi scheme.
Edwin Salazar, 34, of Downey, and Michael Zuniga, 41, of Fullerton have each been arrested on 57 felony counts for defrauding Latino consumers, many of them senior citizens, in a $1.3 million Ponzi scheme.
Bail was originally set at $1.3 million each, but has since been reduced to $100,000 for Salazar and $50,000 for Zuniga.
“These agents allegedly conspired to rip-off trusting members of their own community,” Insurance Commissioner Dave Jones said in a statement. “Preying on senior citizens for financial gain is deplorable and it will not go unpunished.”
According to a joint California Department of Insurance and California Department of Justice investigation, Zuniga, a currently licensed insurance agent, and Salazar, a former insurance agent, allegedly owned and conducted business as the Omega Investment Group (Omega), an unlicensed entity located in Downey.
The investigation revealed crimes of a Ponzi scheme aimed at Latinos. The 57-count complaint includes violations of the California Corporations Code for Securities Fraud, and violations of the Penal Code including Grand Theft, Elder Abuse, Burglary, and Conspiracy. There are 18 victims throughout Los Angeles County.
Beginning in January 2007 and continuing through December 2008, the suspects issued over $1.3 million in fraudulent securities, in the form of one-year promissory notes, purportedly to invest in foreclosed real estate, to individuals in Southern California they befriended through their insurance business, according to investigators.
The suspects entered the homes of the victims, and in some cases, assisted them in refinancing their homes in order to invest in their “risk-free” scheme, and they fraudulently represented that Omega was a profitable business that for three years had bought and sold real estate that was in foreclosure, according to investigators.
The investigation revealed that property and bank records had shown that Omega had not purchased or sold any property for three years prior to January 2007. A further review of Omega’s bank records revealed that it was never a profitable business and did not secure investments with property or any other assets as promised. Instead, the investigation revealed that Omega’s owners had diverted $663,000, from the $1.3 million collected for the purchase of real estate to an undisclosed entity known as Homes Brought Current, and then used these fraudulently diverted funds for their personal benefit. Additionally, in true Ponzi fashion, payments Omega made to newer investors were from prior investor funds, rather than business profit.
Administrative action is currently pending against Zuniga’s insurance license. Salazar’s license expired in 2009.